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Tiffany Reports Second Quarter Results; Company Posts Solid Sales And Earnings Growth

New York, N.Y., August 27, 2010 - Tiffany & Co. (NYSE: TIF) today reported that its worldwide net sales rose 9% in the second quarter ended July 31, 2010, with solid growth in most regions. A higher operating margin also contributed to a 19% increase in net earnings in the second quarter; net earnings from continuing operations adjusted to exclude nonrecurring items rose 45% (see attached "Non-GAAP Measures" schedule).  The Company increased its full year earnings growth outlook.

Michael J. Kowalski, chairman and chief executive officer, said, "Tiffany's financial performance in the quarter continued to demonstrate the benefits derived from a growing global presence, with roughly half of our sales now occurring outside the U.S.  In the quarter, we were pleased that sales increased in most countries and product categories."

In the three months (second quarter) ended July 31, 2010:

In the six months (first half) ended July 31, 2010:

Net sales highlights by segment:

Other financial highlights:

Mr. Kowalski continued, "We look toward the second half of the year with a sense of guarded optimism, continuing to grow our worldwide store base and launching a range of exciting new products, including an extraordinary collection of jewelry with yellow diamonds and an enticing new collection of handbags and leather accessories, among many others."  

He added, "So far in this third quarter, consolidated worldwide sales are growing at a low-double-digit percentage rate over last year, with varying results by region. And, as our sales grow, we are efficiently utilizing our infrastructure to further increase the operating margin. Therefore, based on our better-than-expected second quarter results and expected continued strength in gross margin, we are increasing our annual net earnings outlook to $2.60 - $2.65 per diluted share (from $2.55 - $2.60 previously), although earnings growth in this third quarter (versus last year's $0.33 per diluted share excluding nonrecurring items) will be somewhat restrained by disproportionately higher marketing spending. Tiffany remains strategically and financially well positioned."

2010 Outlook:
Management's outlook for fiscal 2010 is based on the following assumptions which may or may not prove valid:
a) A worldwide sales increase of approximately 11%;
b) By region, sales are expected to increase approximately 10% in the Americas, to increase by a mid-twenties percentage in Asia-Pacific, to decline by a low-single-digit percentage in Japan and to increase by a mid-teens percentage in Europe. Other sales are expected to increase modestly from the prior year;
c) The opening of 14 new Company-operated stores (five in the Americas, seven in Asia-Pacific and two in Europe);
d) An increased operating margin primarily due to a higher gross margin, as well as an improved ratio of SG&A expenses (excluding nonrecurring items) to sales;
e) Interest and other expenses, net of approximately $50 million;
f) An effective income tax rate of 34% - 35%;
g) Net earnings from continuing operations (excluding nonrecurring items) of $2.60 - $2.65 per diluted share.
h) This full year earnings forecast excludes any nonrecurring items such as expenses related to the pending relocation of Tiffany's New York headquarters staff, as well as a net tax benefit recorded in the first quarter which, in total, will reduce earnings in 2010 by approximately $0.06 per diluted share; the Company's previous earnings forecast also excluded nonrecurring items.
i) Capital expenditures of approximately $180 million.

Today's Conference Call:
The Company will host a conference call today at 8:30 a.m. (Eastern Time) to review these actual results and its outlook. Investors may listen at http://investor.tiffany.com ("Events and Presentations").

Next Scheduled Announcement:
The Company expects to report its third quarter 2010 financial results on November 24, 2010 with a conference call at 8:30 a.m. (Eastern Time).  To receive notifications of news releases, please register at http://investor.tiffany.com ("E-Mail Alerts").

Tiffany & Co. operates jewelry stores and manufactures products through its subsidiary corporations. Its principal subsidiary is Tiffany and Company. The Company operates TIFFANY & CO. retail stores and boutiques in the Americas, Japan, Asia-Pacific and Europe and engages in direct selling through Internet, catalog and business gift operations. For additional information, please visit www.tiffany.com or call our shareholder information line at 800-TIF-0110.

This document contains certain "forward-looking" statements concerning the Company's objectives and expectations with respect to sales, store openings, operating margin, net earnings, inventories and capital expenditures. Actual results might differ materially from those projected in the forward-looking statements. Information concerning risk factors that could cause actual results to differ materially is set forth in the Company's 2009 Annual Report on Form 10-K and in other reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

NON-GAAP MEASURES

Net Sales

The Company's reported sales reflect either a translation-related benefit from strengthening foreign currencies or a detriment from a strengthening U.S. dollar.

The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Internally, management monitors its sales performance on a non-GAAP basis that eliminates the positive or negative effects that result from translating international sales into U.S. dollars ("constant-exchange-rate basis"). Management believes this constant-exchange-rate basis provides a more representative assessment of sales performance and provides better comparability between reporting periods.

The Company's management does not, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate the Company's operating results. The following table reconciles sales percentage increases (decreases) from the GAAP to the non-GAAP basis versus the previous year:



Contacts:
James N. Fernandez
(212) 230-5315
Mark L. Aaron
(212) 230-5301



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